Occupancy costs in Connaught Place are higher than Shanghai, Dubai and Boston
According to the CBRE Group bi-annual Global Prime Office Occupancy Costs survey, the central business district of Connaught Place was ranked the ninth most expensive office market in the World. It had an occupancy cost of $153.89 per sq. ft. or about Rs. 10,000 per annum. These occupancy costs were higher than Dubai, Shanghai as well as Downtown Boston. BKC in Mumbai was ranked 20th on the list. Although Connaught Place has a limited supply of prime office space, the location in the heart of India’s capital makes it an ideal choice. It has great infrastructure and connectivity to other parts of the city makes it worth the cost paid.
India’s commercial real estate segment is continuing to do well and the prime locations across the country continue to witness demand for prime office spaces. Locations like Connaught Place in Delhi and BKC as well as Nariman Point continue to witness a demand for office spaces from various occupiers. The list of World’s most expensive office locations has been dominated by Asia, which accounts for seven of the top ten markets. Hong Kong Central is ranked as the World’s highest priced office market with a prime occupancy cost of $302.51 per sq. ft. per annum. The occupancy costs of London’s West End came in second.
Apart from New Delhi, the Finance Street in Beijing, Tokyo Marunouchi/Otemachi) and Shanghai (Pudong) also featured in the list of top ten. Hyderabad saw a huge surge in office rents as compared to Delhi, Mumbai and Bangalore. With the opening of two large sized SEZ, the developments across Hyderabad are significant and highly noticeable. The office rents in Hyderabad registered an average 10%-12% increase. Robust infrastructure development with competitive pricing has helped Hyderabad become a prime destination for IT and non IT industries to set up business.
Over 1.3 million sq ft of office space was absorbed in the quarter, which was led by IT occupiers followed by engineering, manufacturing and pharmaceuticals. With the trend of smaller offices, business owners prefer offices with a floor space of less than 50,000 sq ft. 37% of the overall space leased during the quarter were by IT, followed by banking services which accounted for 21% and engineering and manufacturing which accounted for 18%. Leasing in the quarter was led by Delhi, Bangalore and Mumbai accounting for 55% of the transaction activity. Hyderabad led all the cities in project completions followed by Mumbai. There were delays noticed in regulatory clearances across Delhi, Bangalore and Chennai.